All managers want trustworthy employees. But few managers consider whether employees view their employer as trustworthy. This is important, because when employees do not perceive their employer to be trustworthy, they do not believe the company will fulfil its commitments. This lack of trust undermines all company policies, such as bonuses or other rewards, as no incentive can work if employees expect the organisation to neglect its commitments.
Not surprisingly, research finds that employees' trust in their employer is a crucial factor for organisational success. Yet, relatively little is known about how employees form trust perceptions.
Our research, funded by CIMA's academic research programme, explores how employees form perceptions of their employer's trustworthiness and how features of the organisational structure influence these perceptions.
Data collection for the project involved a case study, with both in-depth interviews and a survey, at a privately owned North American pharmacy retail chain.
Employees' perceptions of their employer's trustworthiness are impacted by three factors: the organisation's benevolence, integrity, and ability.
This is the extent to which the organisation "wants to do good" to its employees. Employees experience benevolence when the organisation expresses genuine care and concern for them as a person, beyond the organisation's concerns about their performance as an employee.
This is employees' perception that the organisation follows an acceptable set of principles. In the case study company, a manager expressed concerns about integrity in the following way: "They pit one manager against another ... which I don't agree with."
This relates to employees' view of the organisation's skills and competencies. In the pharmacy chain, employee views on the organisation's ability varied. For example, one employee viewed the company's product decisions based on the employees' location as incompetent. "They are going to bring in [a certain product] into this store, which is very expensive to begin with. And I mean, we're such a small store. I think that them bringing in [this product] is a complete waste of money. The demographic that we have here [means that] the people that can afford to take that [product] don't come in here. So I'm confused as to why they would do that. All of us here know that it's not going to work."
Factors influencing employee trust
Employees are generally tuned in to their direct manager's opinions. They are likely to view the organisation as trustworthy when their direct manager views the organisation as trustworthy, and vice versa.
Further, when employees lack understanding of the organisation's mission, values, and policies, their trust in the organisation is considerably lower.
The study also showed that employees' reliance on their direct managers' opinions is influenced by the extent of employees' understanding of the organisation's mission, values, and policies. When employees' knowledge about the organisation is low, their direct managers' opinions play a larger role in shaping their trust perceptions. In contrast, when employees have high independent knowledge about the organisation, they are less reliant on their direct managers' opinions when forming trust perceptions.
Practical ways to improve employee trust
Three practical pieces of advice to improve employees' trust in their organisation are:
Systematically examine employee trust
Separately examine the different elements of employee trust in the organisation, as doing this systematically can help diagnose the source of any potential trust issues. Consider the following questions:
- Do the organisation's actions show concern for employees' welfare (benevolence)?
- Are the organisation's actions consistent with employees' norms (integrity)?
- Do the organisation's actions appear competent (ability)?
Build managers' trust in the organisation
Pay particular attention to managers' opinions. If managers' trust in the organisation is low, act quickly to build it, as managers' trust in the organisation will impact their direct reports' trust in the organisation.
Provide information and training
Communication is key. Organisations should ensure that all employees have received information and training to inform them about the organisation's values, mission, and policies. Without this information, employees will rely on their managers' (or other influential employees') opinions, which might not be accurate. The organisation should also consider retraining employees when important changes are made, as outdated information can cause confusion.
These actions can help create high-trust organisations, setting them up for success.
More information on the research can be found here.
Jasmijn Bol, Ph.D., is a professor of accounting at Tulane University, New Orleans, Louisiana, in the US; Katlijn Haesebrouck, Ph.D., is an assistant professor of accounting at Maastricht University in the Netherlands; and Serena Loftus, Ph.D., CMA, is an assistant professor of accounting at Kent State University, Ohio, in the US. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.